Namfisa And The Dereliction Of Duty

THE Namibia Financial Supervisory Authority’s (Namfisa) candle is burning at both ends.

On the one hand the body, which is charged with promoting transparency and accountability by supervising non-bank financial institutions, is showing a remarkable lack of transparency when it comes to its own affairs; on the other hand, it is falling down when it comes to its core functions. Its Chief Executive Officer Rainer Ritter has been suspended on charges that have been notably kept out of the public domain. Added to this, the board that charged the CEO is said to be illegal as it had not been gazetted as required by the act governing Namfisa. Ritter’s disciplinary hearing ground to a halt after the Minister of Finance is believed to have rejected a ‘deal’ reached between Namfisa and the CEO’s lawyers. Ritter in the meantime is pushing Namfisa to honour the ‘deal’ – ‘he resigns and Namfisa withdraws’ all charges against him. The matter is stalled with Namfisa insisting that Ritter answer to the charges at a reconstituted disciplinary hearing.While, Namfisa was dragging its CEO to a disciplinary hearing a bombshell exploded around the beleaguered financial watchdog – the theft of pensioners’ money amounting to close to N$80 million by Prowealth, a company registered with and supposed to be supervised by Namfisa.Since the beginning of this year, Namfisa has promised the media, and in particular this newspaper, that it would issue a statement on the Prowealth issue. To date no statement has been issued. The only information garnered from Namfisa was when it joined the High Court liquidation of Prowealth Group of Companies that was initiated by the liquidator of Prowealth Asset Managers.This court action in defence of pensioners should have been initiated by the body entrusted with that function, instead of it jumping on the bandwagon. A statement by the Acting CEO of Namfisa, Lily Brandt, in her affidavit last Friday in the High Court that ‘no complaints had even been brought to the attention of the 15th Respondent [Namfisa]by any person who placed an investment with the third Respondent [Prowealth Asset Managers]’ is unacceptable to say the least.Namfisa should not have to wait for whistle-blowers or to be tipped off to do its work.It needs to be proactive. And its functions are clearly spelled out in the act establishing Namfisa. Probably foreseeing the type of scenario now painted by Ms Brandt, the International Monetary Fund (IMF) in its Financial System Stability Report of February 2006 warned of ‘significant shortcomings’ in the regulatory agencies in the financial sector, particularly the Non-Bank Financial Institutions (NBFI) sector. ‘Another is to carry out effective off- and on-site supervision as well as implement solvency requirements for insurance companies and pension funds,’ the IMF report points out.It is not good enough for Namfisa or its Acting CEO to say, as stated in Brandt’s affidavit – that no complaints were brought to their attention. Ms Brandt, wake up and smell the coffee. The hard-earned cash of pensioners disappeared from a company that Namfisa should have been policing. According to Ms Brandt, Prowealth had been submitting its quarterly reports as required by law and therefore Namfisa had ‘no reason to investigate the affairs’ of the company. This is not how it works in the financial world, Ms Brandt. Have you never heard of creative accounting?In the Prowealth case, Namfisa and its management have clearly failed the very people it should have protected. We can only hope that there are no more Prowealths out there as, given its current track record, Namfisa will sit back and wait for tip-offs after the fact. By then the fat cats will be long gone.But it is not only management that must take the blame. The board should be the first to say ‘we messed up’ and do the honourable thing. It is just as well that the board is still not gazetted. Our advice to the Minister is not to gazette a board that has failed her and the nation at large.Namfisa needs to get its own house in order, and act incisively and decisively in fulfilling the role for which it was created. We have enough toothless bulldogs.